A.M. Kitco Metals Roundup: Gold Up on More Short Covering, Bargain Hunting, Weaker U.S. Dollar

(Kitco News) - Comex gold prices are trading moderately higher again in the early going Tuesday. Once again gold and silver are seeing short covering and bargain hunting buying interest following the recent dip in prices. A weaker U.S. dollar index Tuesday is also supportive for the precious metals. December gold last traded up $9.40 at $1,692.50 an ounce. Spot gold was last quoted up $7.40 at $1,692.75. December Comex silver last traded up $0.257 at $31.38 an ounce.

Tuesday is a bit of a “risk-on” trading day in the market place, despite the uncertainty of the U.S. presidential election results, which are likely to be known by Wednesday morning. Many precious metals traders are wondering how the election results will impact the metals. There is a general feeling that President Obama getting re-elected would be bullish for the raw commodity sector because of the likelihood of easy U.S. monetary policy being kept in place. A victory by Mitt Romney is seen by many as a bearish development for the commodity markets due to his proclamations that easy money policy in the U.S. needs to be curtailed. It could well be, and it is my bias, that the metals and most other markets produce no major reactions to the U.S. election results.

In overnight news, European stocks were up slightly despite some fresh downbeat economic news coming out of the European Union Tuesday. European market watchers are now looking to a Greek parliamentary vote on fresh austerity measures which is scheduled for Wednesday. The European Central Bank holds its monthly meeting on Thursday. There is a general leadership conference in China later this week, at which time new leaders in China will be selected. Australia’s central bank also met Tuesday to discuss its monetary policy and made no major changes. Many thought the Australian central bank would ease monetary policy.

The U.S. dollar index is trading modestly weaker Tuesday morning on a corrective pullback after hitting a two-month high on Monday. The U.S. dollar bears still have the overall near-term technical advantage but the bulls have gained technical momentum recently. Meantime, Nymex crude oil prices are trading firmer Tuesday morning on some short covering after Monday hitting a four-month low. The crude oil bears have the overall near-term technical advantage. These two key “outside markets” will continue to have a significant daily influence on gold and silver prices.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports and the global services PMI.

The London A.M. gold fixing is $1,691.75 versus the previous A.M. fixing of $1,683.50.

Technically, gold futures bulls are trying to recover from last Friday’s shellacking, but have more work to do in the near term to repair near-term chart damage. A four-week-old downtrend is in place on the daily bar chart. The gold bulls’ next upside price breakout objective is to produce a close above psychological resistance at $1,700.00. Bears' next near-term downside price objective is closing prices below solid technical support at $1,650.00. First resistance is seen at $1,700.00 and then at $1,710.00. First support is seen at the overnight low of $1,683.50 and then at Monday’s low of $1,672.50.

December silver futures also see a four-week-old downtrend in place on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $32.695 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $30.00. First resistance is seen at $31.535 and then at $31.75. Next support is seen at the overnight low of $31.07 and then at Monday’s low of $30.655.

Follow me on Twitter to immediately get the very latest market developments. If you are not on board, then you are not getting key analysis and perspective as fast or as often as you could! Follow me on Twitter to get my very timely intra-day and after-hours briefs on precious metals price action. The precious markets will remain very active. If you want market analysis fast, and in after-hours trading, then follow my up-to-the-second precious metals market perspective on Twitter. It's free, too. My account is @jimwyckoff.